Question to the Department for Education:
To ask the Secretary of State for Education, what recent estimate he has made of the proportion of academy trusts with financial reserves in excess of (a) 10%, (b) 20% and (c) 30% of their annual budget.
At the end of 2019/20 academic year, the total cumulative surplus of trusts with positive reserves was £3.17 billion. This compares with the total cumulative surplus of schools with positive reserves in the local authority maintained sector of £2.27 billion at the end of financial year 2020/21. The proportion of academy trusts with financial reserves in excess of (a) 10%, (b) 20% and (c) 30% of their income is as follows:
Proportion of academy trusts in surplus bands
> 10% revenue reserves as a percentage of income
> 20% revenue reserves as a percentage of income
> 30% revenue reserves as a percentage of income
This is derived from the latest published data on the schools financial benchmarking website and represents academy trusts’ financial position at the end of the 2019/20 academic year. This website is available at: https://schools-financial-benchmarking.service.gov.uk/Help/DataSources.
A sound reserves policy is essential for all academy trusts. Unlike local authority maintained schools, academies are subject to company law, and therefore cannot operate while being insolvent, so they often hold reserves to reduce this risk.
The amount of reserves each academy trust should set aside will depend on the type and size of the academy trust, as well as the particular risks that it faces (for instance, if they are part of a Private Finance Initiative contract).
This is in addition to any reserves that academy trustees wish to set aside to accommodate longer-term plans, such as capital developments and financial investment.